If a quitclaim deed is recorded to remove parties from title, is it subject to the flipping rules?

No.  Property flipping is a practice whereby a recently acquired property is resold, often for a considerable profit.  If there is a partial continuity of ownership, a quit claim deed transaction is not a sale and is not subject to the rules prohibiting property flipping. The use of a quit claim will not be deemed a flip as long as at least one of the original owners retains an ownership interest in the property after the quitclaim is recorded.

FHA's property flipping regulation 24 CFR 203.37a is available at http://www.ecfr.gov/cgi-bin/text-idx?rgn=div8&node=24:
For more information see Handbook 4000.1 II.A.1.b.iv.(A)(3) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-04557